Saturday, February 13, 2016

If your grandparents were farmers or wage-labourers, they needed 4000-5000 calories a day just to avoid starving to death.

You don't get that many calories from eating fucking bunny-food. You get it from beer, cake and fried chicken.

So if you're descended from the working class, your grandparents likely taught your parents to eat that way, and your parents likely taught you to eat that way. That's why you appreciate a big fucking bucket of fried chicken, and why you don't consider a plate of fucking bunny food to be a real meal, unless you're descended from the bourgeois elite.

And if you're not putting in 70 hours a week at the factory like your dad did, you're not burning off those calories, and thus you get fat.

It's also likely, considering class mobility only started to be a thing after WWII, that if you're descended from farmers and peasants, you have a radically different genetic makeup that maximizes energy extraction from food. Because that would have made your ancestors less likely to starve to death.

As an example of what life was like for the proletariat a couple hundred years ago, Robert Fogel calculated that in 1780 the poorest 20% of adults in the UK were so badly malnourished that that they didn't even have the energy for one hour of manual labour per day: that is a magnitude of selection pressure that can radically change a genetic pool in just a thousand years.

So, if someone bitches at you for being fat, stand up for your class and give the fucker a punch in the face.

Market is still being silly. It's so silly that people all of a sudden are buying gold! How silly is that?

Here's some news:

CEPR - the pent-up demand for quits. The argument is that the high quits being reported in the US is actually a crap number, because there should be a massive backlog of quits from the past 7 years of economic weakness. Interesting point.

Calculated Risk - retail sales are fine. What? Sales ex-gas are up 4.5% yoy? OMG it must be a recession! Sell sell sell!

Tim Duy - Fed must embrace a new policy path. OK, he's supposed to be the world's greatest Fed watcher, but I really think Tim Duy is just piddling his panties at the 15% drop in his 401K.

Noah Smith - the thing about financial markets. Basically presents some research that confirms that the minute everyone figures out a way to score beta, the information becomes useless because it gets arbed away. Everyone knows this except economists, apparently. Gee, you'd think they'd have clued in already, what with their fucking fetish for "supply and demand", eh?

Bespoke - gold on the cusp of a new bull market. Damn, I thought I'd have to wait a couple more years before getting back in! Oh well. Let's see what happens to gold after PDAC and the inevitable end to US market panty-piddling, eh? I rather doubt that you can build a base for a new secular bull market on the backs of panicking cokehead honkies.

WSEG - an interview with Larry Summers. Basically, when governments can borrow at zero percent, they should be investing in any infrastructure that has a positive return:

The reality is that it’s government’s responsibility to be countercyclical—that when private saving is substantially exceeding private investment, that is precisely when government should be borrowing and investing.

This is a moment when the United States can borrow money at less than 3 percent for 30 years, in a currency we print ourselves. It is a moment when materials costs are extraordinarily low. It is a moment when construction unemployment rates remain high.

Has there ever been a better moment to fix LaGuardia or Kennedy Airport? It is crazy that at a moment like this, the United States has the lowest rate of federal infrastructure investment, relative to the economy, than we’ve had since 1947. And on a net basis—that is, taking into account depreciation—we’re essentially not investing at all.

So there is a compelling case, in my view, for expanded public investment. Even the International Monetary Fund, hardly a group of radical socialists, has recognized that in situations like the present one, where the economy is close to being in a liquidity trap, the likelihood is that increased public investments will, over time, reduce rather than increase debt-to-GDP ratios, as they call forth increased economic growth.

I yield to no one, not Pete Peterson, not the Concord Coalition, in my concern for the well-being of my children’s generation and future generations. It’s just that I think a deferred maintenance liability of trillions of dollars compounds at a far higher rate than the interest rate at which the United States is now able to borrow. So addressing that deferred maintenance liability is actually reducing the financial burden that we will place on future generations.

And if you think there's no such thing as a government investment with a positive return, you obviously never worked in engineering and thus you're a fucking peon who should keep their fucking mouth shut.

Friday, February 12, 2016

What happens when you get a 60s love guru to perform the hottest dance song of 1990?

Something unbelievably crap, actually.

Actually, he sounds one heck of a lot like Patrick Stewart nowadays doesn't he.

As for the song, the chorus riff is certainly a corker, so I can see why it got to #1 in the US; but the verse lyrics are crap and the verse music is not even. I've been thinking about doing a mashup of this, Shamen's "Move any Mountain", and maybe Chumbawamba's "Tubthumping", to show what a good song you can get when you mix the good parts of three middling superhits: "Move any Mountain" has the vocal line you could do over a repetition of "Unbelievable"'s chorus riff, while Chumba's chorus would be a good verse line for this song.

Wednesday, February 10, 2016

I've just noticed that this exploding Deutsche Bank CDS story is making the rounds, especially on the Russian propaganda websites.

(As an aside, it's interesting that Jeff Berwick has decided to give up fighting for liberty and freedom, and is now instead writing puff pieces for Russian propagandist Max Keiser. I guess it's true that liberty and freedom are only for the young, and that old people eventually gravitate towards the safe and gentle embrace of neo-Nazi statist confiscatory totalitarianism.)

Anyway, there's a lot of Deutsche Bank crap that's so worthless you can just avoid reading it. But then there's Frances Coppola. As she notes, Deutsche is haemmorhaging money because they have no clue how to run a business.

Which is to be expected, since their business model involves exploiting corrupt linkages with the German government, as opposed to making money the honest way.

So Frances is constantly leaning into them, mocking John Cryan for trying to downsize DB down to its "core business", without even knowing what the hell Deutsche's core business really was.

For a normal bank, their core business involves borrowing money from savers, lending it out to lenders, and earning a profit on the vig. That's it. Most boring business model in the world.

But for Deutsche, it seems their "business model" of the past 15 years has been money laundering, tax evasion and sanctions breaking, with a side order of market fixing. Which was profitable for a while, but as it turns out saddled DB with a massive unfunded liability in the form of billions of dollars of potential fines still coming down the pipe. It turns out their "core business" was only profitable so long as they could hide behind the jackboots of Reichskanzler Wolfgang, and with criminality no longer an option they're revealed to be just another bunch of incompetent fools who bleed billions on failed currency trades.

So, everyone can see right now that DB's only lifeline is to dilute their shareholders like some sort of junior miner, which means everyone's running for the exits.

The argument right now is that DB is a prime target for takeover - its market cap is down to $19B, which would make it a charming afterthought for, say, Barclay's wishing to expand into Europe by acquiring an inept clusterfuck with 60-year-old IT, a culture of illegality and corruption, and a prop desk that may as well be taken out to a field in lower Silesia and gunned down.

But the counter to that is that the Germans would never want to see some "foreign company" take over DB, because DB is such a symbol of German business.

Which freaks me out, since that means the Germans are proud of their national bank's record of enabling kleptocrats, mass murderers and drug dealers.

I guess all the Germans who believed in honestly, ethics and legality emigrated the fuck out of that dump in the 19th century, eh?

Law360, New York (February 11, 2015, 9:47 PM ET) -- A Florida federal judge refused to toss claims in a putative class action alleging a group of major investors in Liberty Silver Corp., a Toronto-based mining company, used celebrities to conduct an illegal pump-and-dump scheme with the company’s stocks, ruling Wednesday there was a plausible securities fraud claim.

U.S. District Judge Kenneth L. Ryskamp said he would not dismiss the claims against BG Capital Group Ltd., Outlook Investments Inc., Look Back Investments Inc. and Robert Genovese, who allegedly helped run a manipulation scheme to pump up Liberty Silver's share price.

Plaintiff Todd Stanaford's claims sufficiently allege that the investors’ actions violated the Securities Exchange Act, enriching the defendants by misrepresenting or omitting critical information about the company's holdings and assets to shareholders.

The investors first registered close to 2.5 million shares at $0.05 apiece at a time when Liberty Silver had no employees, cash, property or assets, according to court filings. They then acquired a substantial portion of the shares and allegedly used third-party brokers to disseminate materially false or misleading statements about the mining company through the media, inflating the price of the stock, court filings said.

“Plaintiffs contend that they purchased the securities at the artificially inflated price and relied upon the price of the securities and the statements disseminated by defendants,” the brief said. “Subsequently, plaintiffs allegedly suffered huge losses when defendants 'dumped' large blocks of Liberty Silver stock by selling 6,600,000 shares at $1.31 per share.”

The original complaint against Liberty Silver and select investors takes particular aim at Genovese for allegedly running a stock manipulation scheme involving intricate shell corporations that traded huge amounts of Liberty Silver stock to give the appearance of demand.

The suit claims the company’s shares jumped even further after Genovese successfully listed the company on the Toronto Stock Exchange in December 2011 based on false reports and undisclosed information. After the TSX listing, Genovese then allegedly attempted to drive Liberty Silver shares higher by offering to purchase natural resource company Sennen Resources Ltd. in July 2012 for $48 million.

Sennen CEO Ian Rozier balked at Liberty Silver's offer, saying it and the company's questionable business practices were offensive, according to the complaint.

In October 2012, the U.S. Securities and Exchange Commission's Division of Enforcement halted all Liberty Silver stock trading due to “questions concerning publicly available information about Liberty Silver, the control of its stock, its market price and trading in the stock.” Only after the SEC action did the pump-and-dump scheme come to light, according to the suit.

Representatives for Stanaford and the defendants did not immediately respond to requests for comment Wednesday evening.

According to Liberty Silver and its attorneys, the company and two other named defendants, Geoffrey Browne and William Tafuri, have agreed to settle with plaintiffs in the suit for $1 million. A joint notice of settlement in principle was filed with the court Dec. 5.

“Although defendants continue to deny plaintiffs’ allegations, the company believes it is in the best interests of its stockholders to focus its attention on its business and put the matter behind it,” the company’s statement says.

I'm sure Janet will move the market one way or another tomorrow. Personally, I wouldn't be surprised if she asserts that

1) equity market pantypiddling by coked-up narcissistic psychopaths is none of her concern,
2) the jobs market is holding up well and she expects increasing wage inflation soon (though her own Fed staff have published papers explaining that wage inflation does not feed through to headline inflation), and
3) forward GDP indicators are turning up after the traditional winter sag, so therefore
4) she can't rule out a March rate hike.

Tim Duy knows more about this than me, and he seems to agree right now.

Big deal. It'll happen when it happens. In the meantime, I'm happy to sit back and watch the market get even farther behind the curve.

So here's some news:

Tim Duy - solid jobs report keeps Fed in play. As an aside, he has a recession pencilled in for 2018. He thinks the Fed goes too far with its hikes. Well, even if that's the case, the result will be more a Volcker recession than a 2008-style banking system collapse.

WSJ - what's behind January's strong wage growth. January is the time of year you get your piddly 3% raise. And also the time of year that your company's CEO banks his $50M bonus. Then again, the Fed knows this.

Monday, February 8, 2016

GDPNow - this week's forecast. It updates every week; this is the update for the week of 8 Feb 2016:

The GDPNow model forecast for real GDP growth (seasonally adjusted annual rate) in the first quarter of 2016 is 2.2 percent on February 5, up from 1.2 percent on February 1. After this morning's employment report from the U.S. Bureau of Labor Statistics, the forecast for real consumer spending growth increased from 2.5 percent to 3.0 percent and the forecast for real gross private domestic investment growth increased from -0.4 percent to 2.1 percent.

But if you know a better forecaster, like say some goldbug loon with a blog who believes in eliminating fractional reserve banking and going back to a gold standard, then by all means go with what he says.